diff --git a/src/ng/compile.js b/src/ng/compile.js
index 3de0d53f0388..df5185020f5e 100644
--- a/src/ng/compile.js
+++ b/src/ng/compile.js
@@ -1967,13 +1967,15 @@ function $CompileProvider($provide, $$sanitizeUriProvider) {
           for (i in elementControllers) {
             controller = elementControllers[i];
             var controllerResult = controller();
-            if (controllerResult !== controller.instance &&
-                controller === controllerForBindings) {
-              // Remove and re-install bindToController bindings
-              thisLinkFn.$$destroyBindings();
-              thisLinkFn.$$destroyBindings =
-                  initializeDirectiveBindings(scope, attrs, controllerResult,
-                                              bindings, scopeDirective);
+            if (controllerResult !== controller.instance) {
+              controller.instance = controllerResult;
+              $element.data('$' + directive.name + 'Controller', controllerResult);
+              if (controller === controllerForBindings) {
+                // Remove and re-install bindToController bindings
+                thisLinkFn.$$destroyBindings();
+                thisLinkFn.$$destroyBindings =
+                  initializeDirectiveBindings(scope, attrs, controllerResult, bindings, scopeDirective);
+              }
             }
           }
         }
diff --git a/test/ng/compileSpec.js b/test/ng/compileSpec.js
index d1f97246774c..b30ab8631d9a 100755
--- a/test/ng/compileSpec.js
+++ b/test/ng/compileSpec.js
@@ -4197,6 +4197,130 @@ describe('$compile', function() {
     });
 
 
+    it('should respect explicit return value from controller', function() {
+      module(function() {
+        directive('logControllerProp', function(log) {
+          return {
+            controller: function($scope) {
+              this.foo = 'baz'; // value should not be used.
+              return {foo: 'bar'};
+            },
+            link: function(scope, element, attrs, controller) {
+              log(controller.foo);
+            }
+          };
+        });
+      });
+      inject(function(log, $compile, $rootScope) {
+        element = $compile('<log-controller-prop></log-controller-prop>')($rootScope);
+        expect(log).toEqual('bar');
+        expect(element.data('$logControllerPropController').foo).toEqual('bar');
+      });
+    });
+
+
+    it('should get explicit return value of required parent controller', function() {
+      module(function() {
+        directive('nested', function(log) {
+          return {
+            require: '^^?nested',
+            controller: function() {
+              return {foo: 'bar'};
+            },
+            link: function(scope, element, attrs, controller) {
+              log(!!controller && controller.foo);
+            }
+          };
+        });
+      });
+      inject(function(log, $compile, $rootScope) {
+        element = $compile('<div nested><div nested></div></div>')($rootScope);
+
+        expect(log).toEqual('bar; false');
+      });
+    });
+
+
+    it('should respect explicit controller return value when using controllerAs', function() {
+      module(function() {
+        directive('main', function() {
+          return {
+            templateUrl: 'main.html',
+            scope: {},
+            controller: function() {
+              this.name = 'lucas';
+              return {name: 'george'};
+            },
+            controllerAs: 'mainCtrl'
+          };
+        });
+      });
+      inject(function($templateCache, $compile, $rootScope) {
+        $templateCache.put('main.html', '<span>template:{{mainCtrl.name}}</span>');
+        element = $compile('<main/>')($rootScope);
+        $rootScope.$apply();
+        expect(element.text()).toBe('template:george');
+      });
+    });
+
+
+    it('transcluded children should receive explicit return value of parent controller', function() {
+      var expectedController;
+      module(function() {
+        directive('nester', valueFn({
+          transclude: 'content',
+          controller: function($transclude) {
+            this.foo = 'baz';
+            expectedController = {transclude:$transclude, foo: 'bar'};
+            return expectedController;
+          },
+          link: function(scope, el, attr, ctrl) {
+            ctrl.transclude(cloneAttach);
+            function cloneAttach(clone) {
+              el.append(clone);
+            }
+          }
+        }));
+        directive('nested', function(log) {
+          return {
+            require: '^^nester',
+            link: function(scope, element, attrs, controller) {
+              expect(controller).toBe(expectedController);
+              log('done');
+            }
+          };
+        });
+      });
+      inject(function(log, $compile) {
+        element = $compile('<div nester><div nested></div></div>')($rootScope);
+        $rootScope.$apply();
+        expect(log).toEqual('done');
+      });
+    });
+
+
+    it('explicit controller return values are ignored if they are primitives', function() {
+      module(function() {
+        directive('logControllerProp', function(log) {
+          return {
+            controller: function($scope) {
+              this.foo = 'baz'; // value *will* be used.
+              return 'bar';
+            },
+            link: function(scope, element, attrs, controller) {
+              log(controller.foo);
+            }
+          };
+        });
+      });
+      inject(function(log, $compile, $rootScope) {
+        element = $compile('<log-controller-prop></log-controller-prop>')($rootScope);
+        expect(log).toEqual('baz');
+        expect(element.data('$logControllerPropController').foo).toEqual('baz');
+      });
+    });
+
+
     it('should get required parent controller', function() {
       module(function() {
         directive('nested', function(log) {